Commodity Market Review

In 2008, the world experienced a dramatic surge in the prices of commodities. The prices of traditional staples such as maize, rice and wheat increased significantly, reaching their highest levels in nearly thirty years. In October 2008, the price upswing decelerated and prices decreased sharply in the midst of the financial crisis and the wake of economic recession. Although many food prices fell in excess of 50 percent from their peaks in June 2008, they continue to remain at a significantly higher level than that of 2005. Price volatility has been considerable, making planning very difficult for all market participants. In general, commodity prices are characterized by volatility with booms and slumps punctuating their long run trend. Both abrupt changes and long run trend movements in agricultural commodity prices present serious challenges to market participants and especially to commodity dependent and net food importing developing countries.